Biggest One Month Rally Since April of 2009

1,762 views

Here are the facts: the SPY is up 9.56% month to date.

The last time we enjoyed similar gains was in April of 2009 (+9.94%), September of 2010 (+8.96%), April of 2001 (+8.54%) and March of 2000 (+9.69%).

So what happens after such huge runs? Stick around and I will tell you.

In May of 2009, the market soared by another 5.84%. In October of 2010, the market moved up by another 3.82%. In May of 2001, the market declined by 0.56%. And, finally, in April of 2000, the market dropped by 3.52%.

It’s important to note, since 1993, the market has increased in October by 5% or more four times. Without failure, each October surge spilled into November.

Of course, percentages are meant to be evened out, eventually. And, past performance can only serve as a guideline to future events. But it’s important to respect momentum. When the market gets going, especially into Thanksgiving, it does not relent.

Obviously, if things do not reverse quickly, I will have no choice but to close out my hedges and get long. Even though I missed out on the last few percentage points, I remain at annual and all time highs. It does not look good for the bears, frankly. The news is horrific, but prices continue to move higher. This is classic bull market behavior, whether I like the reasons or not.

My big task is to find stocks that conform to my new risk tolerance level. Into the final months of the year, I will avoid high beta tech and basic material stocks, aside from the ones I already own, in favor of predictable free cash flow food and beverage companies. Naturally, this will evolve or devolve into early 2012 river boat gambling. However, for now, this is where my focus will be concentrated.

42 Responses to “Biggest One Month Rally Since April of 2009”

  1. The Plumbers Crack

    FIG

  2. HANS, there’s a beverage company for you.

  3. With six trading days left, this could become either a negative month or possibly a 15% plus month.

    Crazy volatility.

    I’m betting we squeek out another 3% before the month is done.

    • That would put us in unprecedented mtd gains aka a low probability trade.

      • Since the last two months we traded on the belief of a major meltdown (aka Lehman on roids).

        And now we are trading on the belief that it was all bullshit and we will continue chugging along.

        Why couldn’t we get the 20% back? Technically if we don’t meltdown, then there really hasnt been a major reason to have fallen in the first place.

        • Bullish,

          Not sure that I’m as bullish as you, but what you say makes sense. Consider the drop off because of the loss of AAA rating. Sure it is bad and we still have not addressed our fiscal problems. However, most companies weren’t really directly affected (at least not yet). If a large percentage of people are on sidelines out of fear that world is ending and they see constant up days and good percentage of companies reporting okay or better than okay earnings they could jump in heavy realizing the sell off was a head fake. Then it’s time to sell. As they say when your neighbor starts talking about his big gains in the market it’s time to sell.

        • We could; but not in one month.

    • I am not worried about the month return but I am worried about the long term outlook. How can Harry Dent predict a crash on the next few years
      In his most recent bestselling book, The Great Depression Ahead, Harry S. Dent Jr. predicted the US debt crisis that would ensue in the wake of its government’s failed stimulus plan. In The Great Crash Ahead, Dent forecasts that this economic collapse will become worldwide over the next few years.
      While Jac Nasser, BHP Chairman can see 20 years of global growth
      THE chairman of BHP Billiton, Jac Nasser, has defended the company’s ”stronger for longer stance” towards the resources boom, saying the world is in the midst of a ”dramatic” economic structural shift that will support global growth for at least the next 20 years.

      Read more: http://www.smh.com.au/business/boom-will-go-on-for-at-least-20-years-bhp-chairman-nasser-predicts-20111020-1makv.html#ixzz1bfBLYxCq.

      I think we will see the market sentiment lurch from one view to the other for a while yet.

    • I’m with you!

  4. Maybe the 26th will help decide if the market wants to go up or down in the short term?

    In the long run, you’re probably right. I just don’t think it will happen this upcoming week but instead next month will go up. Who knows? I’ve never been good at predicting longer than a day or two usually.

  5. shipwrecked&alone

    8ft by 5ft, but rent and food is free.
    Climb wall of worry. Seasonal rally. Managers chase performance.

  6. come on, stop with the warren buffett playbook investing crap .. find your inner fly, again

  7. If Australia is any lead for WS there should be one more day in it. Three of my WBPIC stocks got a plug in the local financial press today and lo and behold they are up between 2% to 3%

    New acronym WBPIC warren buffett playbook investing crap

  8. Europe could go sideways after Wednesday. I feel the powers that be want to crank it higher.

    BUT, crazy up and down volatility could be the end result of this coming week.

    I’m calling it 50/50% and I really loathe chasing melt-ups!

  9. Are you kidding me?

    An investment article from Fly? Oh well…I have seen it all now. Lol.

  10. Great. My thesis is already blown to shit, hell Dexia hardly even caused a ripple, instead of hitting like a burning shaft of sunlight on the mosh pit of euro-bankster vampires. Then I read this:

    “It does not look good for the bears, frankly.”

    You Sir, are fucking with my fragile bear psyche. I certainly felt better when you were stepping out of the time machine last week:

    “The ceiling for the month of October has been reached. We trade lower from here, then spike in November. That’s the way this is going to play out, whether you like it or not.”

    Indeud.

    To the space cannons!

  11. Keep getting in and out. This market is going to test the all time highs (DJIA) before the end of the year. There is just too much money on the sideline right now. where are u going to put your money? Lets be real and buywith no sensitive to Price.Just buy A or B or C you het my drift. everything is going up. Avoid people like Bleir, they are there to scare you from getting in and scare you to short at the highs.

  12. Futures are melting up.

  13. SUBCOMANDANTE CHINCHINILLA!!!!!

    Obama about to legalize cocaine.

    Developing…

  14. I’m confused. You told us about April 2009. You said you would tell us what happened next, but then you spoke about March 2009. What happened in May 2009?

  15. AP Headline Sunday October 23, 2011:

    “No deal yet on euro crisis as the danger grows”

    Delayed crisis plan raises stakes in euro crisis; Italy under pressure to get economy in shape.

    Everything is just peachy keen, I tell ya!

    • They’re meeting again on Wednesday. No sense having an agreement when you already ahve the next meeting scheduled. Of course, once aan agreement is reached, the next question is if the thing is viable. Will it work?

      • The next meeting, they might come up with numbers too small, or put it off until the next G-20 meeting November 3rd.

        If they spit out little numbers (less than 1.5 trillion euros) I could see the legs of the table start to wobble.

        It sounds like Merkel is a tough sell. I feel in my gut the deal won’t satisfy the street.

  16. Believe it or not the Dow is the best performing major index in the world year over year, and it’s the only positive one (Nasdaq is second place). With Philly Fed gaining back ground in the leading components (new orders) and the Empire State making a modest uptick among other indicators, things are sluggish but not dire in my opinion. Here’s the world index returns: http://mam.econoday.com/reports/rc/2011/Resource_Center/Archives/IP-Archive/10-24-11/index.html?cust=mam&year=2011

  17. As usual, the answer is not in our stars, but in our… dollar.

    And I think we’ve got another day or two before we decide on where we’re REALLY going…

    Still bearish, despite some nice charts out there.

    Willing to wait, however.

    ______________

  18. short OPEN— breaks down to $39

  19. HSBC China PMI rises to 51.1. Stupid bubble.

    • You beat Trading Nymph to it except you didn’t say “I will have the spine of the Bearded Clam”- or something like that.

  20. OK, I’ll go out on a limb and say it. Rallye [sic] through Wednesday (give or take a day), taking out the short stops above the market. The longs are tentative and won’t stay long, especially when the Euro Bazooka is seen to be too small. Then we sell off, eventually to the bottom of the range. Rinse repeat. I’m wrong if we continue up after Wednesday. In which case I will also remove my hedges, and go fully long into Turkey Day.

    Fly, I think a move to re-institute the formal dress code on iBankCoin would take care of most of the rabble. If they don’t have the decency to dress appropriately, how can they expect us to take their comments seriously?

  21. xxxHuggieBearxxx

    Ladies and Gentlemen-

    We go HIGHER today.

    That is all.

  22. Too many bulls all of a sudden. Contrarians unite!

  23. After monster “flood news” move, Seagate (STX) looks to have heavy overhead resistance technically at $16…set for a short.

Comments are closed.
Previous Posts by The Fly

Biggest One Month Rally Since April of 2009

1,762 views

Here are the facts: the SPY is up 9.56% month to date.

The last time we enjoyed similar gains was in April of 2009 (+9.94%), September of 2010 (+8.96%), April of 2001 (+8.54%) and March of 2000 (+9.69%).

So what happens after such huge runs? Stick around and I will tell you.

In May of 2009, the market soared by another 5.84%. In October of 2010, the market moved up by another 3.82%. In May of 2001, the market declined by 0.56%. And, finally, in April of 2000, the market dropped by 3.52%.

It’s important to note, since 1993, the market has increased in October by 5% or more four times. Without failure, each October surge spilled into November.

Of course, percentages are meant to be evened out, eventually. And, past performance can only serve as a guideline to future events. But it’s important to respect momentum. When the market gets going, especially into Thanksgiving, it does not relent.

Obviously, if things do not reverse quickly, I will have no choice but to close out my hedges and get long. Even though I missed out on the last few percentage points, I remain at annual and all time highs. It does not look good for the bears, frankly. The news is horrific, but prices continue to move higher. This is classic bull market behavior, whether I like the reasons or not.

My big task is to find stocks that conform to my new risk tolerance level. Into the final months of the year, I will avoid high beta tech and basic material stocks, aside from the ones I already own, in favor of predictable free cash flow food and beverage companies. Naturally, this will evolve or devolve into early 2012 river boat gambling. However, for now, this is where my focus will be concentrated.

42 Responses to “Biggest One Month Rally Since April of 2009”

  1. The Plumbers Crack

    FIG

  2. HANS, there’s a beverage company for you.

  3. With six trading days left, this could become either a negative month or possibly a 15% plus month.

    Crazy volatility.

    I’m betting we squeek out another 3% before the month is done.

    • That would put us in unprecedented mtd gains aka a low probability trade.

      • Since the last two months we traded on the belief of a major meltdown (aka Lehman on roids).

        And now we are trading on the belief that it was all bullshit and we will continue chugging along.

        Why couldn’t we get the 20% back? Technically if we don’t meltdown, then there really hasnt been a major reason to have fallen in the first place.

        • Bullish,

          Not sure that I’m as bullish as you, but what you say makes sense. Consider the drop off because of the loss of AAA rating. Sure it is bad and we still have not addressed our fiscal problems. However, most companies weren’t really directly affected (at least not yet). If a large percentage of people are on sidelines out of fear that world is ending and they see constant up days and good percentage of companies reporting okay or better than okay earnings they could jump in heavy realizing the sell off was a head fake. Then it’s time to sell. As they say when your neighbor starts talking about his big gains in the market it’s time to sell.

        • We could; but not in one month.

    • I am not worried about the month return but I am worried about the long term outlook. How can Harry Dent predict a crash on the next few years
      In his most recent bestselling book, The Great Depression Ahead, Harry S. Dent Jr. predicted the US debt crisis that would ensue in the wake of its government’s failed stimulus plan. In The Great Crash Ahead, Dent forecasts that this economic collapse will become worldwide over the next few years.
      While Jac Nasser, BHP Chairman can see 20 years of global growth
      THE chairman of BHP Billiton, Jac Nasser, has defended the company’s ”stronger for longer stance” towards the resources boom, saying the world is in the midst of a ”dramatic” economic structural shift that will support global growth for at least the next 20 years.

      Read more: http://www.smh.com.au/business/boom-will-go-on-for-at-least-20-years-bhp-chairman-nasser-predicts-20111020-1makv.html#ixzz1bfBLYxCq.

      I think we will see the market sentiment lurch from one view to the other for a while yet.

    • I’m with you!

  4. Maybe the 26th will help decide if the market wants to go up or down in the short term?

    In the long run, you’re probably right. I just don’t think it will happen this upcoming week but instead next month will go up. Who knows? I’ve never been good at predicting longer than a day or two usually.

  5. shipwrecked&alone

    8ft by 5ft, but rent and food is free.
    Climb wall of worry. Seasonal rally. Managers chase performance.

  6. come on, stop with the warren buffett playbook investing crap .. find your inner fly, again

  7. If Australia is any lead for WS there should be one more day in it. Three of my WBPIC stocks got a plug in the local financial press today and lo and behold they are up between 2% to 3%

    New acronym WBPIC warren buffett playbook investing crap

  8. Europe could go sideways after Wednesday. I feel the powers that be want to crank it higher.

    BUT, crazy up and down volatility could be the end result of this coming week.

    I’m calling it 50/50% and I really loathe chasing melt-ups!

  9. Are you kidding me?

    An investment article from Fly? Oh well…I have seen it all now. Lol.

  10. Great. My thesis is already blown to shit, hell Dexia hardly even caused a ripple, instead of hitting like a burning shaft of sunlight on the mosh pit of euro-bankster vampires. Then I read this:

    “It does not look good for the bears, frankly.”

    You Sir, are fucking with my fragile bear psyche. I certainly felt better when you were stepping out of the time machine last week:

    “The ceiling for the month of October has been reached. We trade lower from here, then spike in November. That’s the way this is going to play out, whether you like it or not.”

    Indeud.

    To the space cannons!

  11. Keep getting in and out. This market is going to test the all time highs (DJIA) before the end of the year. There is just too much money on the sideline right now. where are u going to put your money? Lets be real and buywith no sensitive to Price.Just buy A or B or C you het my drift. everything is going up. Avoid people like Bleir, they are there to scare you from getting in and scare you to short at the highs.

  12. Futures are melting up.

  13. SUBCOMANDANTE CHINCHINILLA!!!!!

    Obama about to legalize cocaine.

    Developing…

  14. I’m confused. You told us about April 2009. You said you would tell us what happened next, but then you spoke about March 2009. What happened in May 2009?

  15. AP Headline Sunday October 23, 2011:

    “No deal yet on euro crisis as the danger grows”

    Delayed crisis plan raises stakes in euro crisis; Italy under pressure to get economy in shape.

    Everything is just peachy keen, I tell ya!

    • They’re meeting again on Wednesday. No sense having an agreement when you already ahve the next meeting scheduled. Of course, once aan agreement is reached, the next question is if the thing is viable. Will it work?

      • The next meeting, they might come up with numbers too small, or put it off until the next G-20 meeting November 3rd.

        If they spit out little numbers (less than 1.5 trillion euros) I could see the legs of the table start to wobble.

        It sounds like Merkel is a tough sell. I feel in my gut the deal won’t satisfy the street.

  16. Believe it or not the Dow is the best performing major index in the world year over year, and it’s the only positive one (Nasdaq is second place). With Philly Fed gaining back ground in the leading components (new orders) and the Empire State making a modest uptick among other indicators, things are sluggish but not dire in my opinion. Here’s the world index returns: http://mam.econoday.com/reports/rc/2011/Resource_Center/Archives/IP-Archive/10-24-11/index.html?cust=mam&year=2011

  17. As usual, the answer is not in our stars, but in our… dollar.

    And I think we’ve got another day or two before we decide on where we’re REALLY going…

    Still bearish, despite some nice charts out there.

    Willing to wait, however.

    ______________

  18. short OPEN— breaks down to $39

  19. HSBC China PMI rises to 51.1. Stupid bubble.

    • You beat Trading Nymph to it except you didn’t say “I will have the spine of the Bearded Clam”- or something like that.

  20. OK, I’ll go out on a limb and say it. Rallye [sic] through Wednesday (give or take a day), taking out the short stops above the market. The longs are tentative and won’t stay long, especially when the Euro Bazooka is seen to be too small. Then we sell off, eventually to the bottom of the range. Rinse repeat. I’m wrong if we continue up after Wednesday. In which case I will also remove my hedges, and go fully long into Turkey Day.

    Fly, I think a move to re-institute the formal dress code on iBankCoin would take care of most of the rabble. If they don’t have the decency to dress appropriately, how can they expect us to take their comments seriously?

  21. xxxHuggieBearxxx

    Ladies and Gentlemen-

    We go HIGHER today.

    That is all.

  22. Too many bulls all of a sudden. Contrarians unite!

  23. After monster “flood news” move, Seagate (STX) looks to have heavy overhead resistance technically at $16…set for a short.

Comments are closed.